The deficit would be manageable in normal circumstances -- as in the Eighties, the burden of the recession would be passed to low- and middle-income groups, and health and education would be slashed. That's still the establishment's preferred option, but the depth of the banking collapse has changed the game.
Politicians, senior civil servants and their advisers in finance and business decided to try to save the banks they had come to know and love. They've consequently drained the Pension Reserve Fund and squandered tens of billions we don't have.
This is complicated by the fact that much of the Irish banks' gambling debts are owed to German and French banks, who were party to the gambling of Seanie FitzPatrick and his mates.
The most powerful of the EU politicians insist that Irish citizens must pay these gambling debts, since the Irish banks can't. But the debts are so huge that we can't possibly pay them.
Rather than see the German and French banks take a hit, the EU is funding the Irish banks, and the State, with loans we must repay. Meanwhile, they try to think of some solution they can sell to their own, increasingly uneasy, electorates. They will tinker with the EU/IMF stitch-up, to ease pressure on the new Irish Government.
In return, the Government will carry on the Fianna Fail policy. The citizens will continue to tolerate this -- presumably in the hope that suffering in silence will eventually allow us get back to some sort of "normality". This will further depress the real economy, leading to further mortgage defaults, which will lead to demands for more public money to save the banks.
There's no sign that any of this will change. Precisely when and how the chickens come home to roost is anyone's guess.